Let me start with a funny I heard on the news earlier tonight, it was reported that when Putin was asked what he thought of Australia many years ago, he replied: 'I don't think of Australia'.
You might not have heard of Fortescue Metal Group before?
It is Australia’s third largest miner, with a market capitalisation of $57 billion! In a nutshell, it pulls iron ore out of the ground, sells it to China and makes a fortune. The company is controlled by one of Australia’s richest, and most powerful men, who is also a noted philanthropist – Andrew Forrest. He is worth around $16.5 billion, so he’s got a bit of sway.
Of course, having been such a big polluter, he’s greening his company up (whilst continuing to pull the iron ore out of the ground). He has set up Fortescue Future Industries which has an intention to be one of the biggest green energy providers in the world, and around the world, in the production of hydrogen power – and it’s by-products. He’s signing agreements to supply 100,000s of tonnes of Hydrogen, which at the moment, is just in the ‘good idea’ stage. Their intention is to develop the capability to produce 15 million tonnes of hydrogen a year by 2030. Ambitious, huh?
One of the risks for their shareholders is, of course, the question of Russia – which Fortescue Future Industries have immediately tried to distance themselves from.
Prior to this announcement, FFI had been targeting many of Russia’s resources, seeking to develop a number of potential assets in the east of the country – which would give FFI a resource to meet their 2030 target, and a gate-way to Europe (particularly Germany, where many of his deals have been completed). The river systems in Russia being assessed for their suitability to generate electricity.
While FFI has been in Russia for the past two years, the most significant event occurred in June 2021, where Andrew Forrest where he spoke at the St Petersburg Economic Forum. Following which, he made the declaration:
While Russia is rich in oil and gas assets, the potential was to produce 20% of their output in hydrogen power. With the Ukrainian invasion having gotten underway, one of the significant outcomes may be investment in the green energy space in Russia. The geopolitical risks for shareholders to explore opportunities and to invest in infrastructure projects would seem to be too high risk, with the reward not being measured in green outcomes, but in revenue projections.
In the short-term, I don’t think any major corporation would have the ability to minimise risk with their Russian investments, with the appropriate level of reward. I hope something changes in the longer term, as global emissions and associated targets and reductions seem to be coming second place to COVID and now this war.
I stand with the people of Ukraine.